WASHINGTON—New orders for U.S.–made capital goods rose moderately in November while shipments fell, pointing to a slowdown in business spending on equipment this quarter as higher borrowing costs cool demand for goods.
Orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, rose 0.2 percent last month, the Commerce Department said on Friday. These so-called core capital goods orders increased 0.3 percent in October.
Economists polled by Reuters had forecast that core capital goods orders would be unchanged. Core capital goods increased 8.8 percent on a year-on-year basis in November.
The data is not adjusted for inflation. Slowing price increases, a strong dollar, and a shift in spending from goods to services likely contributed to the moderation in core capital goods orders. That is hurting manufacturing, which accounts for 11.3 percent of the economy.
There were increases in orders for machinery, computers, and electronic products as well as electrical equipment, appliances, and components. But primary metals orders slipped.
Shipments of core capital goods dipped 0.1 percent after increasing 1.4 percent in October. Core capital goods shipments are used to calculate equipment spending in the gross domestic product measurement.
Business spending on equipment contributed to the economy’s 3.2 percent annualized growth pace in the third quarter. The Federal Reserve last week hiked its policy rate by 50 basis points to a range of 4.25 percent–4.50 percent, the highest since late 2007. U.S. central bank officials expect the rate to rise to between 5.00 percent and 5.25 percent next year, a level that could be sustained for a while.
Orders for items ranging from toasters to aircraft that are meant to last three years or more dropped 2.1 percent in November after rising 0.7 percent in October.
They were weighed down by a 6.3 percent decrease in orders for transportation equipment, which followed a 1.9 percent increase in October. Motor vehicle orders slipped 0.1 percent. Orders for the volatile civilian aircraft category plunged 36.4 percent.
